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CIRCULAR No. 32/2004/TT-BTC OF APRIL 12, 2004 GUIDING THE ISSUANCE OF GOVERNMENT BONDS THROUGH THE STATE TREASURY SYSTEM

In furtherance of the Government's Decree No. 141/2003/ND-CP of November 20, 2003 on the issuance of Government bonds, Government-guaranteed bonds and local-administration bonds, the Finance Ministry hereby guides the issuance of Government bonds through the State Treasury system as follows:

I. GENERAL PROVISIONS

1. Government bonds issued through the State Treasury system mean bonds with a term of one year or more, including Treasury bonds, central-project bonds and foreign-currency bonds (collectively referred to as bonds).

2. The State Treasury system shall directly sell bonds to bond-purchasing organizations and individuals; organize the payment of bond principals and interests and keep and preserve bonds when so requested by bond owners.

3. Basing himself/herself on annual capital mobilization plans, demands for use of the State budget's capital and implementation progress of projects and works, the Finance Minister shall decide on specific contents of each drive of bond issuance through the State Treasury system.

4. Bonds issued through the State Treasury may be transferred (purchased, sold, donated, presented, bequeathed) or pledged in credit transactions.

Bonds in Vietnam dong sold at prices higher or lower than their denominations in each issuance drive with the same date of issuance and date of payment maturity can be listed and traded at the Securities Trading Center (the Stock Exchange).

II. SPECIFIC PROVISIONS

1. Issuance and payment currencies

Bonds issued through the State Treasury system shall be issued and paid in Vietnam dong and freely convertible foreign currencies.

Bonds issued in a certain currency shall have their principals and interests paid in such currency.

The Finance Minister shall decide on types of issuance foreign currency and areas where foreign-currency bonds are to be issued for each issuance drive.

2. Bond forms and denominations

2.1. Bonds are issued through the State Treasury system in form of certificates or book entries, registered or bearer.

2.2. Bonds issued in Vietnam dong shall have the minimum denomination of VND 100,000 (one hundred thousand dong). Other denominations are multiples of 100,000.

Denominations of foreign-currency bonds shall be decided by the Finance Ministry for each issuance drive.

2.3. Bond certificates shall have the contents prescribed by the Finance Ministry and printed by the State Treasury for distribution to purchasing organizations and individuals.

3. Bond interest rates and interest payment modes

3.1. Bond interest rates shall be decided by the Finance Minister for each issuance drive, compatible with the common interest rate on the market and ensuring benefits for bond-purchasing organizations and individuals.

3.2. Issued bonds shall have fixed interest rates and have their interests paid by the following modes:

a/ Periodical interest payment;

b/ Lump-sum payment of interests together with principals upon their maturity;

c/ Interest payment right upon their issuance.

4. Bond purchasers

Purchasers of bonds issued through the State Treasury system include:

4.1. Vietnamese citizens at home and abroad;

4.2. Overseas Vietnamese;

4.3. Foreigners working and residing in Vietnam;

4.4. Non-business units;

4.5. Political organizations; socio-political organi-zations; socio-political-professional organizations; social organizations; socio-professional organizations;

4.6. Enterprises and economic organizations of all economic sectors;

4.7. Foreign organizations lawfully operating in Vietnam.

Organizations being the State budget beneficiaries must not use money allocated by the State budget to purchase bonds.

The Finance Minister shall specify bond purchasing subjects for each issuance drive.

5. Bond sale modes:

5.1. Mode of denomination parity sale

This mode shall apply in cases where bonds are issued continually in a year or in long issuance drive without prefixed issuance ending time.

By this mode, money amounts paid by bond purchasers to the State Treasury shall be exactly equal to bond denominations. Bond issuance date shall be the date when the State Treasury receives money amounts from bond purchasers or credit notes from banks (in case of bond purchase by account transfers).

5.2. Mode of sale at prices higher or lower than denominations

This mode shall apply in cases where bonds are issued in drives, each lasting for no more than 2 months, with prefixed issuance starting time and ending time.

Bonds issued in a drive shall have the same issuance date and payment maturity date.

Methods for determining bond selling prices:

a/ For sale of bonds at prices higher than their denominations

This mode shall apply in cases where the actual bond selling date comes after the bond issuance date. The formula for calculating bond selling prices shall be as follows:

MG x Ls x n

G = MG + ——————

365

In which:

G: Bond selling price

MG: Bond denomination

Ls: Bond interest rate (%/year)

n: Number of days from the issuance date to the actual selling date.

b/ For sale of bonds at prices lower than their denominations

This mode shall apply in cases where the actual bond selling date precedes the bond issuance date. The formula for calculating bond selling prices shall be as follows:

MG x Ls x n

G = MG - ——————

365

In which:

G: Bond selling price

MG: Bond denomination

Ls: Bond interest rate (%/year)

n: Number of days from the actual selling date to the issuance date.

In cases where the bond selling date coincides with the issuance date, the money amounts paid by bond purchasers to the State Treasury shall be exactly equal to bond denominations.

The Finance Ministry shall specify methods for determining bond selling prices for each issuance drive.

6. Payment for bond purchase

Organizations and individuals that purchase bonds may pay in cash or by account transfers.

7. Payment of bonds upon their maturity

7.1. Payment of bond principals and interests upon maturity

a/ For Vietnam-dong bonds

- For bearer bonds in central custody at the Securities Trading Center (the Stock Exchange): The payment of bond principals and interests shall be made at the bond custody organizations. One day before the deadline for principal and interest payment, basing itself on the State Treasury's requests, the Finance Ministry shall transfer money to the Securities Trading Center (the Stock Exchange) for the custody organizations to directly pay to bond owners.

- For bearer bonds not in central custody at the Securities Trading Center (the Stock Exchange): Bond owners may freely choose places for principal and interest payment at the State Treasury units. The State Treasury shall advance capital for payment to bond owners. Monthly, the State Treasury shall sum up the paid amounts and request the Finance Ministry to refund the advanced amounts.

- For registered bonds: The payment of bond principals and interests shall be made at the places of issuance. The State Treasury shall advance the treasury balance for payment to bond owners. Monthly, the State Treasury shall sum up the paid amounts and request the Finance Ministry to refund the advanced amounts.

b/ For foreign-currency bonds:

The payment of bond principals and interests shall be made at the State Treasury where such bonds were issued.

In cases where the bond principal and interest payment amounts contain foreign-currency odds (smaller than a monetary unit), such odds shall be converted into Vietnam dong at the selling rate announced by the Foreign Trade Bank in localities at the nearest time for payment to clients.

Foreign-currency sources for payment at the State Treasury units shall be channeled from the central State Treasury. For cases where the Finance Ministry purchase foreign currencies of the State Bank for payment of principals and interests of mature bonds, the average transaction interest rates on the inter-bank foreign currency market at the time of purchase shall apply.

c/ In cases where bond owners do not come for payment upon the interest or principal payment maturity, such interest or principal amounts shall be reserved and refunded when so demanded by bond owners, without capitalized interest and interest during the over-mature period.

d/ When having their bonds paid, bond owners may receive cash or request the transfer of the whole principal and interest amounts of their mature bonds into their accounts. Money transfer charge shall be deducted from amounts to be received by bond owners.

e/ In cases where the bond owners, for force majeure reasons, cannot come for payment of mature bonds, they may authorize other persons to receive paid amounts on their behalf. Persons coming to receive bond payments must bring along their people's identity cards and bond owners' letters of authorization certified by agencies, units or People's Committees (of communes, wards or district townships) where bond owners have registered permanent residence.

7.2. Payment of immature bonds and redemption of immature bonds

The payment of bonds and interest rates thereon during the immature period shall comply with the Finance Ministry's regulations for each issuance drive.

Depending on the practical conditions, the Finance Minister may decide on the redemption of immature bonds. The bond redemption modes and prices shall be decided for each drive and notified to bond owners.

8. Handling of cases of bond loss or damage

8.1. In cases where bearer bonds are lost or erased, modified, torn, ragged or damaged to the extent that their original shapes and/or original contents are no longer retained, they shall not be paid.

8.2. In cases where registered bonds are lost or torn, ragged, damaged, the bond owners must notify such in writing to the State Treasury where such bonds were issued. The heads of the concerned State Treasury units shall have to check such bonds and confirm the payment thereof upon their maturity provided that they have not yet been abused for money withdrawal. If such bonds have already been abused, the heads of the concerned State Treasury units shall have to promptly inspect, determine reasons therefor and take handling measures according to law provisions.

9. Management of bond issuance revenue sources and bond principal and interest payment sources

9.1. The whole revenue amount from the bond issuance shall be concentrated into the central budget and accounted according to the Finance Ministry's regulations before for use to meet spending demands according to the State budget estimates and to fund works and projects designated by the Prime Minister.

Revenues from the issuance of foreign-currency bonds, after subtracting direct foreign-currency expenses, shall be sold at the average transaction exchange rates on the inter-bank foreign currency market at the selling time by the Finance Ministry to the State Bank for increasing the State's foreign exchange reserve.

9.2. Capital sources for bond principal and interest payment shall be guaranteed by the central budget and incorporated in the State budget estimates or come from the issuance of Government bonds in subsequent drives.

10. Transfer of bonds

Bonds issued through the State Treasury system may be used for transfer (purchase, sale, donation, presentation, bequeathal).

10.1. For bearer bonds:

a/ Bonds in central custody at the Securities Trading Center (the Stock Exchange) may be freely transferred according to the regulations on securities and securities market.

b/ Bonds not in central custody may be freely transferred without going through the procedures at the State Treasury where they have been issued.

10.2. For registered bonds: When they are transferred, they must go through the procedures carried out at the State Treasury.

The general director of the State Treasury shall guide in detail the order and procedures related to the transfer of registered bonds at the State Treasury units.

11. Certification of bonds when procedures for pledge thereof are carried out

11.1. For bearer bonds: The State Treasury shall not give certification of bond owners.

11.2. For registered bonds: When credit institutions request (in writing) the certification of the legality and validity of pledged bond certificates, the State Treasury units' heads shall sign to certify the names of bond owners and bond purchase amounts after ensuring through examination and comparison their compatibility with the contents of archived dossiers.

12. Expenses related to bonds

12.1. Expenses for bond issuance and payment

All expenses for bond issuance and payment shall be ensured by the central budget, including:

a/ Expenses for printing of bond certificates under contracts with printing agencies.

b/ Expenses for bond issuance and payment by the State Treasury system, which are equal to 0.5% of the value of bonds directly sold by the State Treasury to purchasers.

Particularly, the bond issuance and payment for the Social Insurance, the State Treasury shall enjoy the charge rate of 0.2% of the value of issued bonds.

In cases where bonds are issued in foreign currencies, the issuance and payment expenses shall be converted into Vietnam dong at the accounting exchange rates prescribed by the Finance Ministry.

c/ Payment expenses for bonds in central custody at the Securities Trading Center (the Stock Exchange) shall be equal to 0.1% of their actually paid principal and interest amount.

12.2. Charge for bond preservation and safe-keeping

The charge for bond preservation and safe-keeping at the State Treasury shall comply with the Finance Ministry's current regulations on management of precious and rare assets and valuable certificates which the State Treasury accept to keep and preserve (now the Finance Ministry's Circular No. 80/1999/TT-BTC of June 28, 1999).

Depending on the practical situation, the Finance Ministry may decide on exemption of the charge for bond preservation and safe-keeping at the State Treasury for each type of bonds and each type of bond purchasers.

12.3. Charge for transfer of bond payment money amounts

The charge for transfer of bond principals and interests into accounts at requests of bond owners shall be paid by bond owners at the rate equal to the via-bank payment charge rate.

III. ORGANIZATION OF IMPLEMENTATION

1. This Circular takes effect 15 days after its publication in the Official Gazette.

2. The ministers, the heads of the ministerial-level agencies, the heads of the Government-attached agencies and the presidents of the People's Committees of the provinces and centrally-run cities shall have to coordinate with the Finance Ministry in implementing this Circular.

The general director of the State Treasury and the heads of the concerned units under the Finance Ministry shall have to guide and organize the implementation of the provisions of this Circular.

For the Finance Minister

Vice Minister
LE THI BANG TAM